A representative for the accounting firm couldn't comment, saying the company hadn't seen the suit. Lawyers for Fuld and the company's directors weren't immediately available for comment.

The suit said New Jersey's purchases of preferred and common stock in 2008 were based on financial statements and materials that contained material misstatements and omissions about the value of Lehman's assets. It also said Lehman executives told representatives of the state Division of Investment the firm had sufficient liquidity, a strong capital base, and superior hedging, risk management and valuation practises.

"Lehman's executives kept telling investors its financial position was solid when, in fact, the opposite was true," said Attorney General Anne Milgram. "The state bought and held Lehman securities at artificially inflated prices and lost millions."

New Jersey purchased $2m in preferred stock in an April 1 offering and nearly $120m of common stock at $28 a share and $60m in preferred stock in a June 12 offering after Lehman representatives asked the Division of Investment to make the purchases, according to the suit.